Is it Twilight for China?

Focus: GLOBAL

Jim Jubak Image Jim Jubak Founder and Editor, JubakPicks.com

The inflation boost in China in January, which led bears to cry havoc, should just be a blip related to Chinese New Year, says MoneyShow's Jim Jubak, who explains what to watch.

My guest today is Jim Jubak, and we’re talking about inflation in China. So what’s the deal? Every day I hear this: “Oh my gosh, look at the interest rates over there; what’s going on in China? We can never invest there again.”

Right.

Is that the truth?

Yes, I wish you would all never invest there again, until I’m done establishing all my positions.

Oh thanks. OK, OK. (laughter)

What we’ve had is this little spooky episode that inflation in 2011 was climbing in China, hitting a high in, as I remember, July. And basically, the Central Bank during that whole thing was raising interest rates and raising bank-reserve requirements to try to slow the economy.

So while that was happening, no one wanted to put money in China. The Chinese certainly didn’t want to put money in their stock market, and China was in a massive bear market.

After that, inflation has gradually come down. It came down to 4.1% in December. What has spooked people is that in January it went back up to 4.5%, and I have only three words to tell those people: Lunar New Year.

And what do you mean by that?

What do I mean by that? OK, so the Lunar New Year is, first of all, lunar, which means that it moves around from year to year.